It's wake up time for America.
The president who wasn't going to raise taxes for anyone earning less than $250,000 just raised the average guy's taxes around $1,000 annually. I'm assuming a major factor in his decision was that by reloading Social Security's cash flow, in four years the same gimmick can be used again to buy votes from the unwary.
Eight weeks after the election and the "no new taxes for the middle class" promise has been broken.
To be sure, the tax rate increased for estates and couples earning more than $450,000 each year but those folks acted at the end of December to ensure they accelerated two years of projected income into 2012 for the purpose of avoiding the tax hike. By moving 2013 and 2014 income into 2012, they avoided the higher tax structure.
Thus, most higher income earners have protected their funds in shelters for the next two years while middle class earners get an extra $1,000 deducted from their pay starting with their next pay check.
This increase is exacerbated by the fact that the average income in the country has dropped from $54,000 four years ago to less than $49,000 today. On average, we have more tax on less earnings. To add insult to injury, the average net worth of families (because of lower housing prices) is down in the same period by about 40 percent.
Last year President Obama invited big business representatives to Washington to get support for a tax increase on the rich, which has subsequently turned into a tax increase for all working people. The discussion with business leaders was about how U.S. business taxes are among the highest in the industrialized world, weakening our country's global competitiveness. The point of the White House meetings was that if taxes on the rich were raised, then business taxes could be decreased, creating an atmosphere in which job creation could thrive.
However, the president recently indicated that taxes may increase to keep government spending at the level where it is presently. Since personal taxes have already gone up along with inheritance and capital gains taxes, I take his comments to mean either one of two things, or both. Business taxes will rise to take care of existing and new programs and/or there will be a new taxes introduced.
I expect to see a debate about a national sales tax or a tax on savings and checking accounts over a certain balance.
The sales tax will be sold as a decrease in "middle income" taxation but will result in more money to the government. Don't be fooled. If it brings in more cash to the U.S. Treasury, then you will pay it. Just like the promise to not raise taxes on the "middle class," you will somehow be included in the tax on invested capital. Invested capital includes bank accounts, IRAs, 401(k)s, and pension plans.
About the tax increase just passed: Our Constitution states in Section 7 that all revenue raising laws must originate in the House of Representatives. So what happened? The Senate sent a tax bill to the House that subsequently got passed and signed by the president.
In the best case, that bill was the original tax bill the House sent to the Senate to balance the budget, which Senate Majority Leader Harry Reid never allowed on the floor. Presumably the Senate completely gutted that bill and used all new language to craft the new bill, which ultimately passed. What happened to the intent of the Constitution to avoid such actions?
And to think, these are our leaders.